Human Right Policies

7/30/2019 Human Right Policies

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Mandate of the Special Representative of the Secretary-General on Human Rights and

Transnational Corporations and Other Business Enterprises

Palais des Nations Tlphone: +41 22 917 92 99CH-1211 GENEVE 10 Tlfax: +41 22 917 90 10

E-mail: [email protected]

BUSINESS RECOGNITION OF HUMAN RIGHTS:

GLOBAL PATTERNS,

REGIONAL AND SECTORAL VARIATIONS

A study conducted under the direction of

John G. Ruggie

Harvard University

UN Secretary-Generals Special Representativefor Business and Human Rights

by

Michael Wright & Amy Lehr

The SRSG expresses his deep gratitude to the Governments of Canada and Sweden for

supporting this research. The authors would like to thank Rachel Davis for her researchand editorial assistance and Diego Quiroz-Onate and Jonathan Kaufman for their researchassistance.

NATIONS UNIESHAUT COMMISSARIAT DES NATIONS UNIES

AUX DROITS DE LHOMME

PROCEDURES SPECIALES DE LA COMMISSION

DES DROITS DE LHOMME

UNITED NATIONSOFFICE OF THE UNITED NATIONS HIGH

COMMISSIONER FOR HUMAN RIGHTS

SPECIAL PROCEDURES OF THE HUMAN RIGHTS

COUNCIL


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EXECUTIVE SUMMARY

This report summarizes the human rights standards referenced or invoked in the policiesof three levels of business organization: a cross section of more than 300 companies fromall regions of the world; eight collective initiatives; and five socially responsible

investment indices. For each of the three levels, we looked for indicators expressing orreferencing rights included in the International Bill of Human Rights. We also examinedwhether the prescribed policies and practices include accountability mechanisms forcompanies, such as reporting requirements; whether they hold the companies' suppliers toany human rights standards; the extent to which they stipulate corporate engagement withexternal stakeholders; and the human rights instruments to which companies, collectiveinitiatives, and indices refer. Finally, we examined policies concerning bribery andcorruption because they can and do impede the realization of rights.

Our research led to the following overall findings:

Recognition of Labor Rights

! Labor rights enjoy greater business recognition than any other human rights. The mostwidely recognized labor right is non-discrimination by 87 percent of the companiesincluded in the study. It is followed by the right to a safe and healthy workenvironment, freedom of association and the right to collective bargaining, theprohibition on forced labor, and the prohibition on child labor.

! European and North American businesses lead in their recognition of labor rights.Companies in the Asia & Pacific region follow closely behind the average. LatinAmerican firms trail in their recognition of almost all labor rights the mostsignificant lags being in the areas of nondiscrimination, the abolition of forced and

child labor, and the right to family life.! At a rate of 56 percent, Retail & Consumer Products firms lead in their recognition of

the right to a minimum wage, exceeding the overall sample average by 20 percent. At37 percent, Financial Service firms lead in recognizing the right to a family life arate almost double that of many sectors. Infrastructure and Utility companies lag intheir recognition of numerous rights: the prohibitions against forced and child labor,the right to a minimum wage, the right to rest and leisure, and the right to family life with recognition reaching as low as 11 percent for some rights. Financial Servicessignificantly trail in their recognition of the prohibitions against forced and child labor,at 20 percent less than the average of other sectors.

! Collective initiatives and SRI indices mirror the overall pattern of labor rights

recognition.

Recognition of Non-Labor Rights

! Recognition of non-labor rights is less prevalent across the board. At just under 20percent, the right to privacy receives the widest support by companies, followed bysecurity of the person, including freedom from torture and cruel, inhuman, ordegrading treatment.


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! North American and European firms lead in their recognition of the right to privacyand security of the person. By sector, Extractives and Retail & Consumer Productsfirms recognize security related rights at slightly higher rates than other sectors.Information Technology (IT) and Retail companies recognize the right to privacy morethan other sectors, while Extractives, Financial Services, and Pharmaceutical and

Chemical companies stand out for their recognition of the right to development.! There is a substantial difference in the recognition rates for non-labor rights by

companies, collective initiatives, and SRI indices:o Company policies exhibit greater concern for the right to privacy than do the

collective initiatives and SRI indices.o In part because of the sectors they represent, the collective initiatives we

examined place a greater emphasis on freedom of movement and minorityrights to culture. The manufacturing industry initiatives focus more ontraditional labor rights, whereas the extractive sector initiatives place greaterstress on indigenous rights and community relations.

o The SRI indices exhibit a particular concern for indigenous rights, including

the right to cultural life, the benefits of scientific progress, and protection ofauthorial interests. Some SRI indices also show strong support for the right todevelopment.

! Some rights, such as the right to freedom of thought, conscience and religion, and theright to seek asylum, receive little or no recognition from the company policies,collective initiatives, or SRI indices.

! The companies strongly emphasize their philanthropic contributions in areas coveredby economic, social and cultural rights. Many SRI indices use company philanthropicactivities as an investment screen. In contrast, the collective initiatives we examinedhave no requirements that companies conduct philanthropic activities.

Accountability & External Engagement

! The company policies and practices, collective initiatives, and SRI indices all addresshuman rights in reporting. However, the manner in which individual companies reportvaries widely. In some cases the information is buried in complex websites, therebylimiting the effectiveness of reporting for internal as well as external purposes.Furthermore, the use of external auditors or assurance processes to verify reportedinformation is strikingly low. Of the companies employing external verificationmethods, most are European.

! The inclusion of some human rights standards in supply chain management is acommon feature of company policies, collective initiatives, and SRI indices. Policies

vary widely, however. Some require the entire supply chain to comply with the samebroad range of human rights as the company itself. Others only hold first tier suppliersto such standards. Some only require suppliers to adopt a limited number of rights,most often the prohibitions on child and forced labor.

! North American and European companies lead in their inclusion of human rightsstandards in supply chain management two-thirds of the U.S. firms in the sample,and roughly 60 percent of the Europeans. Asia & Pacific and Latin Americancompanies trail by more than 20 percent. Retail & Consumer Products firms lead in


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this regard by as much as 35 percent over other sectors.

! The SRI indices all use community consultation and engagement as a screeningcriterion, in contrast to fewer company and collective initiative references to thisprocess. Human rights impact assessments also receive the greatest support from theSRI indices.

!

A large number of companies discuss anticorruption, with the exception of LatinAmerica, where only 21 percent of companies report having anticorruption policies.Several of the SRI indices also consider bribery and corruption issues. In contrast,anticorruption is not a major emphasis of the collective initiatives.

Sources

! Global Compact (GC) companies were one of the main sources of information for thisstudy (sources and selection criteria are described in the body of the report). Hence, itis not surprising that the GC would be the most frequently referenced source bycompanies. Other commonly recognized instruments and sources include: the

Universal Declaration of Human Rights (UDHR), the International LaborOrganization (ILO) Tripartite Declaration of Principles concerning MultinationalEnterprises and Social Policy, and the Organization for Economic Co-operation andDevelopment (OECD) Guidelines for Multinational Enterprises.

! Certain sectors are more likely to acknowledge particular international instruments.For example, the extractive industries are more likely to refer to the VoluntaryPrinciples on Security and Human Rights, and financial services to the EquatorPrinciples.

! The language of the collective initiatives and SRI indices often echo internationalinstruments more directly than companies, which makes them easier to interpret andmeasure. One of the difficulties in conducting the company research was the

prevalence of unclear language and lack of precision in policies.

In sum, this report shows that certain human rights receive substantial recognitionby business, including companies, collective initiatives and investors. The levels ofsupport vary according to the type of right, with labor rights ranking highest. In contrast,some non-labor rights receive little or no attention. Variation in recognition also resultsbecause different sectors recognize rights that seem more directly relevant to their work.At the same time, the report demonstrates inconsistencies and ambiguities in howbusiness entities translate human rights into policies, with some companies, even withinthe same industry, translating a particular right narrowly while others construe it morebroadly.


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Table of Contents

Introduction to the Report4

I. Company Policies and Practices 6

Introduction..6A. Labor Rights.......8B. Non-Labor Rights.........14

Security of the Person.....15Other Civil/Political & Economic/Social Rights....16

C. Accountability & External Engagement ..20Reporting....20Supply Chain Management....22Community Consultations, Including Impact Assessments...24Philanthropic Programs..25

D. Anticorruption..26

E. Sources 26SummaryPart I... 29

II. Collective Initiatives 31Introduction31

A. Labor Rights.... 33B. Non-Labor Rights.... 36

Security of the Person.37Other Civil/Political & Economic/Social Rights...37

C. Accountability & External Engagement.. 39Reporting39Supply Chain Management40Community Consultations, Including Impact Assessments...40Philanthropic Programs..... 41Environmental Programs related to Human Rights... 41

D. Anticorruption..41E. Management and Implementation Systems..............41F. Sources.42

SummaryPart II. 43

III.Socially Responsible Investment Indices 44Introduction....44

A. Labor Rights.... 47B. Non-Labor Rights.... 49

Security of the Person 50Other Civil/Political & Economic/Social Rights...50

C. Accountability & External Engagement.. 52Reporting52Supply Chain Management53Community Consultations, Including Impact Assessments...53


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Philanthropic Programs..... 53D. Anticorruption......54E. Sources.54

SummaryPart III 55

IV.Conclusion.. 56

V. Authors Biographies.58


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Table of Acronyms

CoP Global Compact Communication on Progress

CSR Corporate Social Responsibility

DJSI Dow Jones Sustainability World Index

EICC Electronic Industry Code of Conduct

ETI Ethical Trade Initiative

FLA Fair Labor Association

FTSE4Good Financial Times Stock Exchange 4 Good Index

GC Global Compact

GRI Global Reporting Initiative

ICCPR International Covenant on Civil and Political Rights

ICESCR International Covenant on Economic, Social and

Cultural Rights

ICMM International Council on Mining and Metals

ICTI International Council of Toy Industries

IFC International Finance Corporation

ILO International Labor Organization

IT Information Technology

NGO Non-Governmental Organization

OECD Organization for Economic Co-operation and

Development

SA8000 Social Accountability 8000

SRI Socially Responsible Investment

SRSG Special Representative of the Secretary-General

UDHR Universal Declaration of Human Rights

WRAP Worldwide Responsible Apparel Production


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Introduction to the Report

1. The resolution establishing the SRSGs mandate asks him to identify and clarifystandards of corporate responsibility and accountability with respect to human rights.This request was not confined to legal standards that may impose direct or indirect

obligations on companies, but was also meant to include the realms of social expectationsand moral obligations. A key indicator of the latter consists of the human rights standardsthat business itself adopts, triggered by its assessment of human rights-related risks andopportunities in the social and political environments in which it operates. This reportsummarizes the human rights standards referenced or invoked by a cross-section ofcompanies, collective initiatives, and socially responsible investment funds.

2. The present study complements the SRSGs survey of the human rights policiesand management practices of the Global Fortune 500 (FG500) companies.1 But it differsfrom that survey in three important respects. First, it is based on actual documentation ofsuch policies and practices rather than on questionnaire responses. Second, it includes a

broader cross-section of companies, including transnational and national companiesdomiciled in emerging markets and developing countries. Third, it provides informationabout the human rights standards of business entities other than firms. The two studiestogether comprise the most comprehensive analysis yet conducted on the subject ofbusiness and human rights.

3. Part I of this report summarizes the publicly available information of more than300 companies that have human rights policies and management practices in place setting out how they address the broad spectrum of rights as evidenced in companyreports, websites, codes of conduct, and general policies. Part II identifies the humanrights standards included in selected collective initiatives, both industry-based and multi-stakeholder. And Part III examines the human rights criteria employed by SRI indiceswhen selecting companies for investment.

4. For each of our three units of analysis individual companies, collectiveinitiatives, and SRI indices we looked for indicators expressing or referencing rightsincluded in the International Bill of Human Rights.2 We also examined whether theprescribed policies and practices include accountability mechanisms for companies, suchas reporting requirements; whether they hold the companies' suppliers to any humanrights standards; the extent to which they stipulate corporate engagement with externalstakeholders; and the human rights instruments to which companies, collective initiatives,and indices refer. Finally, we examined policies concerning bribery and corruptionbecause they can and do impede the realization of rights.

1 See Human Rights Policies & Management Practices of Fortune Global 500 Firms: Results of a Survey, Business andHuman Rights Resource Centre, available at http://www.reports-and-materials.org/Ruggie-survey-Fortune-Global-500.pdf

2 See Fact Sheet: The International Bill of Human Rights, United Nations High Commissioner of Human Rights,

available athttp://www.unhchr.ch/html/menu6/2/fs2.htm, stating, The International Bill of Human Rights consists ofthe Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, andthe International Covenant on Civil and Political Rights and its two Optional Protocols.


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5. Two caveats should be noted. First, it is possible that some companies do notmake public all of their human rights-related policies and management practices, inwhich case they would have escaped our attention and the companies would not receivetheir due credit. This is unlikely to affect collective initiatives or the SRI indices, which

tend to display their policies prominently in the public domain. Second, it is well beyondthe scope of the present report to assess how effectively the stated policies and practicesare actually implemented. Thus, by "business recognition" of human rights we mean thepolicies and management practices described in publicly available sources.

6. Finally, some of the findings in this study differ from those in the SRSGs FG500survey the reported uptake of non-labor rights and accountability mechanisms bycompanies was higher in the survey than we found in the present research. Two factorsmay explain the difference. First, respondents to the FG500 survey tended to be best inclass, leaders in corporate social responsibility including human rights, whereas thecurrent study deliberately looked at a broader cross-section of firms although still

limited to those known to have human rights policies. We cannot say with any degree ofcertainty whether these differences represent anything more than a time lag betweenOECD country-based firms and others. Second, the FG500 survey was based on aquestionnaire whereas the current research examined actual company policies.Questionnaire responses may have been exaggerated or the actual policies may be poorlydescribed or inaccessible in companies publicly available sources of information,making it impossible for us to code them. Nevertheless, the overall patterns reported inthe two studies are consistent with one another: the discourse of human rights is makinginroads into the corporate sphere.


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I. COMPANY POLICIES AND PRACTICES

Introduction

7. Beyond the realm of legal compliance, the human rights policies and management

practices that business adopts signal its understanding of what society expects ofresponsible corporate citizens. This report summarizes the human rights standards forcorporate responsibility and accountability that are referenced or invoked by a cross-section of companies, collective initiatives, and socially responsible investment funds.Part I focuses on companies.

8. The report presents the results of a snapshot taken at one moment in time (June-July 2006); subsequent studies may well discover somewhat different patterns becausethis is a rapidly evolving field.

Our Sample

9. The sample of companies for this report was drawn from an original list of almost500 firms that included: (i) the 103 Global Fortune 500 that responded to the SRSG'squestionnaire; (ii) the nearly 100 companies listed on the Business and Human RightsResource Centres website as having human rights policies; and (iii) the 512 GlobalCompact (GC) companies that had submitted a Communication on Progress (CoP) for2005 or later. We chose these sources because there was every reason to expect that thesecompanies would have publicly accessible human rights policies enabling us to documentthe standards they embodied. Once we eliminated multiple listings, we were left withnearly 500 companies.

10. The list became shorter for several reasons. Language resource constraints meantthat we were unable to include companies with information solely in Japanese, Russian,and Chinese although companies from those countries that had English sources wereincluded. For the rest, we excluded companies for which we were unable to findinformation about their human rights commitments in any publicly accessible source.Also, we generally included parent companies and excluded subsidiaries and holdingcompanies to avoid duplicate recognition.

11. Our final sample consists of 314 companies from 5 regions: Africa, Asia and thePacific, Europe, Latin America and North America. It includes companies from some ofthe major emerging economies like the Peoples Republic of China, India and Brazil. Wesorted the companies into 9 industry sectors: Extractive; Financial Services; Food andBeverage; Heavy Manufacturing, Infrastructure and Utilities; Information Technology,Electronics, and Telecommunications; Pharmaceutical and Chemical; Retail andConsumer Products; and a residual category (Other). The following figures illustrate thecomposition of our sample by region and by sector.3

3 The percentage of companies from Latin America and Africa participating in the Global Compact is

slightly higher than in our sample. Many of those companies have only recently joined the GC and have not


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Our Coding Method

12. We drew information about individual companies from the companies websites;their Annual or Corporate Social Responsibility (CSR) Report (if published separately);and their 2005 (or later) GC CoP where applicable. As stated above, we looked only at

yet submitted a CoP or devised their own means of reporting, and thus, they were excluded on the basis that

they had little or no publicly available information.


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publicly available information (with the exception of the responses to the SRSGsquestionnaire, which have been separately reported on by the SRSG). Therefore, wewere unable to include recognition of rights by companies that exists only as internalcompany policies or unpublished practices. And as already noted, the scope of this studydid not include the extent to which policies and practices are actually implemented.

13. We considered both formal policies as well as references to company practicein our searches. We searched first for a specific human rights policy before consideringother sources, such as corporate codes of conduct, human resources policies, andsustainable development commitments. Many of the companies were members of CSRinitiatives, ranging from the broadly applicable principles of the UNGC to the industryspecific Voluntary Principles on Security and Human Rights. We recorded membershipbut did not assume that membership entailed automatic recognition of the rightspromoted by the initiative. We also sought to reflect companies level of support forparticular rights by recording wherever possible the exact language used.

14. We codified support for a range of rights included in the UDHR, the ILO CoreConventions, the International Covenant on Civil and Political Rights (ICCPR),International Covenant on Economic, Social and Cultural Rights (ICESCR) and theDeclaration on the Right to Development. We also recorded company reporting practicesand supply chain human rights requirements, as well as community consultation andimpact assessment policies in relation to the companies human rights commitments.

15. Because corporate philanthropy is not an explicit focus of this project (or theSRSGs mandate), we only considered philanthropic programs when they were clearlylinked to a human rights purpose (typically health, education or development). We alsoincluded anticorruption policies and practices because of the potential for corruption toimpede the realization of many if not all rights.

16. This section of the report first presents the human rights companies themselvesrecognize, including labor and non-labor human rights. Next, we show how companieshold themselves, and their suppliers, accountable to their human rights standards bylooking at reporting practices as well as supply chain management policies. Third,external engagement by companies is measured through examination of communityconsultation practices, human rights impact assessments and philanthropic activity.Anticorruption policies are considered next. Finally, we set out the sources thatcompanies look to for guidance regarding human rights.

A. Labor Rights

17. Companies recognize labor rights with greater frequency than any other humanrights. The highest rate of recognition is for non-discrimination, at almost 90 percent ofall companies in our sample, and the lowest, for the right to family life, at just below 25percent. As shown in Figure 3, there is also strong recognition of the right to a safe workenvironment, followed by freedom of association and the right to collective bargaining,the elimination of forced or compulsory labor, and the abolition of child labor.


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A more detailed discussion follows.

Nondiscrimination

18. Almost 90 percent of the companies in our sample have a nondiscrimination

policy. Over 90 percent of North American and European and over 80 percent of Asia &Pacific companies have such a policy. In contrast, Latin America lags with only 61percent. Four of the five African companies also have a nondiscrimination policy. Nosignificant sectoral variations were found.

19. Most companies make firm commitments to nondiscrimination in the workplace.Statements are made in absolute terms, using language like, does not discriminate,employees are not subjected to discrimination, and will not [permit] or [tolerate]. Asmall number of companies make less firm commitments, using the language respectsdiversity or promotes nondiscrimination.

Policies include commitments not to discriminate on the basis of:

! gender

! disability

! ethnic or racial status

! age

! religion

! caste


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! sexual orientation

! union membership

! political affiliation

! HIV/AIDS status

! parental status

Notably, no company policy includes all dimensions; however, some companies do makea general commitment to nondiscrimination on all grounds.

20. Several companies have affirmative action policies related to people withdisabilities, Gay, Lesbian, Bisexual and Transgender individuals, ethnic minorities, thelong-term unemployed, and women. Some companies also use affirmative action toachieve supplier diversity. To support a diverse supplier base, one North Americanretailer has a Minority and Women Business Development Program to providementoring for minority general contractors.

21. Commitments to the right to equality at work (roughly 39 percent of the totalsample) and the right to equal pay for equal work (roughly 23 percent) are frequentlyintegrated into nondiscrimination policies or occur as separate statements alongside thepolicy. Equal pay for equal work is often articulated as an achievement based or meritbased pay scalelooking narrowly at performance to determine compensation.

22. One Swiss infrastructure and utility company makes a commitment tonondiscrimination that includes recognition of the right to equality at work and the rightto equal pay for equal work:

To offer equality of opportunity to all employees and not to engage in or

support discrimination in hiring, compensation, access to training,promotion, termination or retirement based on ethnic and national origin,caste, religion, disability, sex, age, sexual orientation, union membership,or political affiliation.

Right to a Safe Work Environment

23. Around 75 percent of companies commit to the right to a safe work environment.At 86 percent, North American companies report safe work environment policies morefrequently than any other region. European companies are a close second at 79 percent,with Asia & the Pacific at 67 percent, and Latin America at 46 percent. No significant

sectoral variations were found.

24. To address this right, companies use language like, strives to provide anddedicated topossibly to avoid liability issues related to accident occurrences. Thefollowing is a common example of what is found:


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it is our responsibility to provide safe and healthy working conditions.[The Company] strives to prevent any injuries at work, both for our ownemployees and contractors. Quote from a Dutch Chemical Company.

25. One Spanish Telecommunications Company stands out because of its use of

health and safety committees, comprised of an equal number of workers and companyrepresentatives. The committees monitor workplace conditions and routinely receiveitemized reports on risks, including psychological and social risks.

Freedom of Association, Right to Collective Bargaining

26. Some 66 percent of the companies recognize bothfreedom of association and theright to collective bargaining. Nearly 75 percent of European companies recognize bothrights. In contrast, 63 percent of North American companies and around 50 percent ofcompanies from each of the remaining regions recognize these rights. No significantsectoral variations were found.

27. Companies almost always recognize the freedom of association and the right tocollective bargaining in tandem. Commitments are made using language like, respects,allows, recognizes, or does not impede with regard to these rights.4

28. In addition, freedom of association and the right to collective bargaining arefrequently recognized in broad terms, with no limitations. Several companies evencommit to the freedom to organize and bargain in the presence of local laws restrictingthe rights:

In situations or countries in which the rights regarding freedom ofassociation and collective bargaining are restricted by law, parallel meansof independent and free organization and bargaining shall be facilitated.(Quote from a German Retail Company.)

29. However, some companies narrow the rights. For example, some limitrecognition to the scope of national law or only recognize unions that represent a certainpercentage of employees.

Abolition of Forced and Child Labor

30. Around 60 percent of the companies recognize the prohibitions against forcedand child labor. European and North American firms average around 65 percentrecognition for both prohibitions, Asia & Pacific companies around 50 percent, while 3of the 5 African companies address the prohibitions. In contrast, only 29 percent of LatinAmerican companies mention the prohibitions against slavery and forced labor, and a

4 To recognize Freedom of Association and the Right to Organize, companies merely are required to notimpede or frustrate the individual/collective exercise of these rights, versus actually providing the right asin the case of rights like the minimum wage.


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mere 25 percent mention the abolition of child labor. For all companies, the prohibitionsare often recognized in concert. Several also hold their supply chain to these prohibitionsspecifically.

31. Most sectors recognize the prohibitions between roughly 60-70 percent of the

time; however, two sectors fall short: the Financial Services sector at around 40 percent,and Infrastructure & Utility at around 45 percent. In addition, even though the majorityof retail sector companies recognize the prohibitions against forced and child labor, lessthan a quarter of Asia & Pacific companies in this sector recognize the prohibition againstchild labor and only around 30 percent recognize the prohibition against forced labor.

Minimum age policies that support the prohibition against child labor

32. Almost 30 percent of companies also state a minimum age policy that furthersupports the prohibition against child labor. By region, North American and Europeancompanies state the minimum age of employment around 30 percent of the time, with

Asia & Pacific companies following at 25 percent. In contrast, Latin Americancompanies only mention the minimum age of employment around 14 percent of the time.Two of the five African companies also have such statements.

33. By sector, the Retail & Consumer Products and Food & Beverage sectors state theminimum age of employment most frequently, both with 42 percent of their companieshaving minimum age policies. At the low end, only 14 percent of Pharmaceutical andChemical companies and 11 percent of Infrastructure & Utility companies have suchpolicies.

34. Of those companies with a minimum age policy, many follow the standards of theILO Minimum Age Convention.5 These companies often set the minimum age ofemployment at 15 or 18 years of age or the age of the end of compulsory schooling.Other companies commit to the national law standard, which also frequently reflects theILO standard. A few companies specify the ILO Convention as their official policy.

Right to Minimum Wage, Including Decent Living

35. The right to a minimum wage is recognized by just 36 percent of the sample. At46 percent and 40 percent respectively, North American and European companies addressthe right to a minimum wage more often than companies in other regions. Asia & Pacificcompanies address the right to a minimum wage at a rate of 29 percent, while LatinAmerican companies follow closely behind at 25 percent recognition. Two of the fiveAfrican companies address the right. By sector, Retail & Consumer Products firms leadwith 56 percent having policies addressing minimum wages. The Extractive andInfrastructure & Utility sectors trail at 27 percent and 20 percent respectively.

5ILO Minimum Age Convention, ILO, available athttp://www.ilo.org/public/english/employment/skills/recomm/instr/c_138.htm


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36. Companies vary greatly in their approach to a minimum wage. While somemake commitments to the national minimum wage, others commit to fair compensationor adequate compensationalmost always requiring a second inquiry into what fairor adequate would be. In addition, some companies claim to follow the industrystandard, which is also largely unidentifiable without further inquiry. A few companies

commit to exceed the local minimum wage. At least two companies also expresslyprohibit illegal or unauthorized deductions.

37. Very few companies express their commitment to a minimum wage in relation tothe needs of employees. The following policy is an atypical commitment that connectsthe two:

To ensure that wages paid meet or exceed the legal or industry minimumstandards and are always sufficient to meet basic needs of personnel and toprovide some discretionary income. (Quote from a Swiss EngineeringCompany.)

Work/Life Balance

Right to Rest and Leisure, Including Holidays with Pay

38. The right to rest and leisure is recognized by approximately 30 percent of thecompanies. Recognition ranges from a high in North America of 38 percent to a low inLatin America of 21 percent. While most sectors recognize the right to rest and leisure atrates in the 30 percent range, the Infrastructure & Utility Sector and Pharmaceutical &Chemical sector are exceptions, at 14 percent and 23 percent respectively. Companiesfrequently address the right in terms of maximum work hours and limitations onovertime. Few companies discuss policies for paid holidays and vacation.

39. Of those discussing maximum work hours and overtime limitations, a Swedishappliance manufacturer stands out in its attempt to balance the ILO standard withnational requirements and business needs:

[The Company] recognizes the need for a healthy balance between workand free time for all employees. Unless national regulations require alesser maximum hours of work, and except under extraordinary businesscircumstances, employees shall not, on a regularly scheduled basis, berequired to work a standard work week of more than 48 hours per week ora total work week of more than 60 hours (including overtime). Except in

extraordinary business circumstances, all workers shall be entitled to atleast one day off in every seven day period.

40. Of the few companies discussing other benefits, such as paid leave, a footwearand apparel company commits to provide workers with paid leave and holidays, thegreater of what is required by law or industry.


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Right to Family Life, Including Maternity Leave

41. Slightly under a quarter of the companies address family life in their policies.Both European and Asia & Pacific region companies recognize the right around 25percent of the time. In contrast, North American and Latin American firms addressfamily life at a rate of 14 percent; none of the African companies mention family life intheir policies. By sector, Financial Service firms lead, at 37 percent recognition of theright to family life. While other sectors follow closely and fall between 20-30 percentrecognition, there are significant differences. The Food & Beverage sector marks thestart of the bottom tier at 16 percent, with Infrastructure & Utility companies following at14 percent and Heavy Manufacturing companies at 11 percent.

42. Admittedly, detailed policies that illustrate commitments to family life are hard tofind in public searches. Companies with policies primarily discuss work and family lifebalance. Many state that they ensure, support, and encourage a family life. Of thefew companies with more specific policies, most provide for benefits such as: maternityleave, parental leave, flex time, and condensed workweeks. One company goes beyondthis by providing assistance in the event of a serious illness of a family member. Severalcompanies also offer child care facilities on site.

Right to Work

43. Codification of support for the right to work is particularly difficult. Under theICESCR, the steps that states must take in ensuring the progressive realization of theright include the provision of vocational training. While over 50 percent of companieshave policies dealing with training, most concern necessary on-the-job training, orpromotion within the company, and cannot reliably be characterized as support for theright to work.6

44. Despite the company focus on training, a handful of European companies makebroader commitments, which could be seen as supporting the right to work. For example,in the event of restructuring, a few European companies commit to the protection ofemployees through redeployment. One European company also commits itself to target,train, and help reintegrate the long-term unemployed into the workforce.

B. Non-Labor Rights

45. Recognition of non-labor human rights is far less common in company policies(see Figure 4), with the highest rate of recognition in this grouping at roughly 19 percent

for the right to privacy. Although we considered all non-labor rights appearing in theUDHR, ICCPR, ICESCR, and Declaration on the Right to Development, here we note

6 Training policies of this type are slightly more prevalent in Europe, with 62 percent of companies havinga policy. North American and Latin American firms mention training policies around 50 percent of thetime, Asia & Pacific Companies report training policies at a rate of 38 percent, and 2 of the 5 Africancompanies report such policies.


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only those with greater than 4 percent recognition by companies. Because of the alreadylow levels of recognition, sectoral and regional variations became statistically lessmeaningful but are addressed where interesting differences occur.

Security of the Person

46. Around 16 percent of companies recognize the right to life, liberty, and securityof the person and 13 percent recognize the freedom from torture and cruel, inhuman ordegrading treatment. The slightly higher recognition of the right to life, liberty, andsecurity of the person is due to a few companies that explicitly link their guidelinesgoverning the behavior of their security forces, or prohibitions on involvement in armedconflict, to the right to life. Also, several companies make a general commitment toprotect the right to life.

47. In addition, policies that prohibit physical and/or mental harassment in theworkplace were coded as support for both the right to life, liberty, and security of theperson as well as the freedom from torture and cruel, inhuman, or degrading treatment.


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Such harassment policies account for the bulk of corporate recognition of these security-related rights.

48. North American and European companies have a higher rate of harassmentpolicies than companies in other regions. Thus, when these companies harassment

policies are combined with their other policies recognizing security-related rights, theyscore roughly 30 percent and 16 percent, respectively, on the right to life, liberty andsecurity of the person; and 25 percent and 14 percent, respectively, on freedom fromtorture and cruel, inhuman and degrading treatment. Companies in the remaining regionsrecognize these rights less than 7 percent of the time, with only 1 of the 5 Africancompanies have a policy that addresses the right to life, liberty, and security of the personand none address the freedom from torture and cruel, inhuman, or degrading treatment.

49. The Extractive and Retail & Consumer Products sectors have slightly higher ratesof recognition of these rights relative to other sectors. Thirty-one percent of extractivecompanies recognize the right to life, liberty, and security of the person and 20 percent

recognize freedom from torture. The latter could be due to the inclusion of 15 of the 16extractive companies that are members of the Voluntary Principles on Security andHuman Rights,7 which require contracted security forces to not violate human rights.Retail & Consumer Products companies recognize both the right to life, liberty, andsecurity of person and the freedom from torture approximately 25 percent of the time.

50. In the following policy, a Dutch international supermarket operator defines a safework environment as one free from violence, threats, or intimidation, therebysimultaneously recognizing the right to a safe work environment and the security of theperson:

All [ ] Group Companies are committed to providing you with a safe and securework environment. A safe and secure work environment also means a workplacefree from violence. Threats (whether implicit or explicit), intimidation andviolence have no place at any [ ] company and will not be tolerated.

Other Civil/Political & Economic/Social Rights

Right to Privacy

51. Around 19 percent of companies recognize the right to privacy. Regionally, over20 percent of European and North American companies recognize the right while lessthan 10 percent of companies address it in the remaining regions. By sector, the right is

most often recognized in the IT, Electronics & Telecommunications and the Retail &Consumer Products sectors, with 30 percent recognition in each. In addition, companiesin the Infrastructure and Utility sector recognize the right to privacy, but do not recognizeany other non-labor rights.

7 Voluntary Principles on Security & Human Rights, available athttp://www.voluntaryprinciples.org/


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52. Commitments to the right to privacy are made primarily in relation to employeesand consumers. Several IT, Retail, and Financial Services companies have stand-aloneconsumer privacy policies, while others have one policy for both employees andconsumers.

Right to Development

53. Eleven percent of the companies address development in their policies andprograms. While no regional disparities are apparent, three sectors concentrate ondevelopment more often than others. Extractive and Pharmaceutical and ChemicalCompanies address development at a rate of 27 percent, and Financial Services at a rateof 18 percent. The remaining sectors mention development related policies and programsat rates below ten percent. Companies primarily strive and aim to promotedevelopment in the communities or countries in which they operate. Some companieshave specific programs that use their business expertise to support development efforts.For instance, several Financial Services firms have favorable policies ranging frompromoting small business and housing loans to third world debt relief.

54. A French heavy manufacturing company illustrates the most commoncommitment to development:

"[The Company] seeks to make a contribution to the economic, social andeducational well-being of the communities in which it operates throughlocal and sustainable business development, and by providingopportunities for employment, improvement to Infrastructure & Utility,technology acquisition and training."

55. One British extractive company goes further and indicates the percentage ofexpenditures to be used locally:

Using local suppliers and contractors is the most sustainable ways for usto encourage development in areas where we operate At least a third ofour expenditure will continue to be spent directly on a local basis,benefiting indigenous businesses and supporting the regional economy.

56. As an example of the financial services sectors approach to development issues,one Canadian bank partners with aboriginal communities to develop agency branchesthought to fuel economic development:

The agency works with a host [ ] branch to provide basic bankingservices. Agency management decides on its own hours, language ofservice and business objectives, and it can reinvest the revenue it earns inthe community. This means community members no longer need to travellong distances to do their banking and more money stays in thecommunity for economic development."


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Right to Social Security

57. Companies often commit to follow the national requirements for pensions andretirement funds, with only one company in our sample expressly stating that it goesbeyond the legal minimum. Additionally, three companies specifically mention that theyprovide for short and long-term disability payments, while another company provides alump sum payment to employees exiting the company.

Right to Hold Opinions, Freedom of Information and Expression

58. While few companies commit to the right to hold opinions, freedom ofinformation and expression, of those that do, most commit to ensure, guarantee, andprotect. Two companies qualify their policy: one guarantees protection within thebounds of the law and the other provides an exception for hate speech.

59. One South African extractive company commits to "[r]espect local communities freedom to articulate their thoughts, concerns and anxieties about [its] operations."

Right to Self-Determination, Including Indigenous Peoples Right to Informed Consent

60. Extractive companies make more extensive commitments to indigenouscommunities relative to other sectors. Commitments range from statements of respectfor local communities and cultures to obtaining their free and informed consent.

61. The following policy guides a Chilean mining company in its relationships withindigenous communities. The Company commit[s] to:

! respect Indigenous peoples' rights, customs and beliefs in all

aspects of operations under national and international law;! ensur[e] prior knowledge and to keep them informed;

! contribute to economic development of Indigenous communities;

! cooperate in preserving and disseminating Indigenous knowledgeand culture; to encourage Indigenous employees to join.

Right to Physical and Mental Health

62. Companies generally have policies of some sort regarding the health ofemployees; however, these policies were not counted as recognizing a broader right tohealth because they constitute more of an employee benefit.

63. Some policies do move closer toward recognizing a broader right to health. OneSouth African extractive company provides medical care to employees, contractors "and,to some extent, [ ] the communities in the areas where the group operates. The companyalso coordinates outreach HIV/AIDS programs with NGOs, other companies, and variouslevels of government in South Africa. One Filipino Food & Beverage company operatesa hospital, not only for staff and their dependents, but also for emergency cases from thesurrounding community.


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64. For several companies, HIV/AIDS is a specific concern. A Brazilianpharmaceutical company addresses it through the mechanism of Social Service HealthAreas, serving both employees and the community:

Social Service and Health areas [ ] are responsible for assessing theneeds of HIV/AIDS patients and for offering the necessary support to thecollaborator and his/her family in terms of treatment and access tomedication, transport, legal assistance and psychological support. Thecompany continuously observes the health conditions of HIV positivecollaborators or those suffering from AIDS so as to keep them integratedand engaged in a kind of work appropriate to their condition.

Right to Education

65. Companies acknowledge the right to education almost exclusively throughphilanthropic programs. Nevertheless, one company does provide scholarships and othereducational support to employees, suppliers, and partners, and another states that it takescare of the school education of employees children. The Brazilian operation of aSpanish Telecommunications company states that it assures [that] employees childrenunder 18 years of age are in school.

Right to Participate in Cultural Life, the Benefits of Scientific Progress, and Protection of

Authorial Interests

66. Article 15 of the ICESCR groups together the rights to 1) participate in culturallife, 2) the benefits of scientific progress, and 3) the protection of authorial interests .However, companies often only address one part of the article and, if more than one partis addressed, the parts are typically handled in separate policy statements. To illustrate,one North American Extractive addresses only part 1 of article 15 in its CSR Policy:

We will identify and assess our contributions to social and culturalchanges in the areas where we operate and develop appropriate strategiesto respect the rights and cultures of local communities.

A European Pharmaceutical company addresses two parts, part 2 & 3 of Article 15.However, it does so in separate statements, one in its human rights policy and the other inits research and development policy:

We believe that all humanity should share in the benefits of science andwill work to make that possible. [Human rights policy]

In the event that we do develop a commercial product using traditionalknowledge, we will ensure a clear benefit is returned to the country oforigin, for example through royalties or a share of net profits. [Researchand Development Policy]


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Right to Adequate Food, Clothing, and Housing

67. Although the right to adequate food, clothing, and housing receives littleattention, one American science and technology firm aims to use its intellectual propertyto improve nutrition and alleviate hunger.

[The Company] will endeavor to be socially and culturally responsible asit shares knowledge and appropriate technology in developing economiesto help improve food, nutrition and the quality of life. [The Company]will seek to utilize its intellectual property in ways that help alleviatehunger.

C. Accountability & External Engagement

68. To better understand how companies account for the above mentioned humanrights commitments, we looked at: 1) how they report on their human rights standardsand performance and 2) the degree to which they hold supply chains accountable tohuman rights standards. In addition, we examined how companies address the humanrights of communities through a review of community consultation practices, impactassessments and philanthropic activities.

69. The following graphic presents the percentage of companies that report on humanrights, have supply chain management policies addressing human rights, and engage incommunity consultations to address the rights of affected communities.

Accountability

Reporting

70. Nearly all companies report on their human rights performance in some form.However, the quality and format of reporting varies greatly.


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71. With Global Compact companies being one of our main sources of information,roughly two thirds of the companies in our sample report on human rights through theGC CoP.8 The CoP describes company progress toward meeting the GCs ten principles,including the two human rights principles. The CoP is not intended to be a complete

report of all company human rights activity, and a great deal of discretion is afforded thecompany when deciding what to include. As a result, the contents of CoPs vary greatly.Many companies simply commit to the GC principles in their CoP, report on labor rightsalone, or on their human rights related philanthropic activity. Very few report on progresstoward non-labor human rights as they appear in the ICCPR, ICESCR, and UDHR.

72. Although they are few in number, the most comprehensive reports includespecific policies, their effectiveness in quantitative and qualitative terms, current andfuture human rights aims, and some measurement for progress toward those aims. Eventhen, however, reporting is typically focused on labor rights.

73. We found that companies producing annual reports using the Global ReportingInitiatives (GRI) guidelines had the most accessible and comprehensive reports, as theGRI covers many of the labor rights and a number of the human rights considered in thisstudy. The GRI is the second most used reporting scheme in our sample, with almost 150companies in our sample applying it. 9 Also, even when they do not follow the GRIsprecise requirements, some companies state that they are inspired by its framework. Anumber of other companies follow the GRI guidelines on environmental reporting only.

74. In addition to annual reports, a number of companies produce separate annualcorporate citizenship or sustainability reports that address their human rights relatedpolicies and efforts. Again, these reports tend to focus on labor rights, philanthropicactivities, and, in the case of a sustainability report, the companys environmentalperformance.

75. Companies rarely use external auditors or other assurance processes to verifyreported information; only 18 companies of the 314 report that they employ suchmeasures. Of those 18 companies, 13 are European. Where external verification takesplace, the majority of companies use a private consulting firm. However, one company ispiloting a review of their annual sustainability report by an expert External ReviewCommittee, which includes representatives from organizations like TransparencyInternational and the Danish Institute for Human Rights.

8 For a GC company to be included in our sample, they must have a CoP in the year 2005 or later.Therefore, the number of CoPs is roughly equivalent to the number of GC companies in the sample.

9 See GRI Guidelines, GRI, available atwww.globalreportinginitiative.org. In addition, the new G3guidelines are set for release in October 2006 and also available on the GRI website.


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Supply Chain Management

76. Around 54 percent of companies report that they include human right standards intheir supply chain management. European and North American firms do so morefrequently than others, at 67 percent and 59 percent respectively. In contrast, 37 percent

of companies from Asia & the Pacific and 29 percent of Latin American companiesaddress supply chain issues. Two of five African companies also have such policies.

77. The Retail & Consumer Products sector stands out from all the other sectors with80 percent of its companies reporting some management of their supply chain. Over halfof the companies from most other sectors report on a system for managing human rightswithin their supply chainIT, Electronics and Telecommunications (65 percent), Food &Beverage (63 percent), Heavy Manufacturing (58 percent), Infrastructure and Utility (58percent), and Pharmaceutical & Chemical (55 percent). The Extractive and FinancialServices sectors are slightly lower (with 45 percent and 39 percent of companiesrespectively).

78. Despite the emphasis on promoting human rights standards through supply chainmanagement, companies are not consistent in their expectations of suppliers. Theircommitments can range from encourag[ing] to requir[ing] suppliers to meetstandards, and the actual human rights standards often are not expressed in detail.

79. Of the few companies that do elaborate on standards, most define them in VendorCodes of Conduct or other guidelines that set out the parameters of specific rights, likethe right to a minimum wage and freedom of association, and require that supplierscomply with the code. One British communications company expressly usesinternational standards to gauge supplier performance, stating that we want workingconditions in our supply chain to meet the standards of the Universal Declaration ofHuman Rights and the International Labour Organisation.

Commitments are made in the following ways. Companies either:

1) encourage the supply chain partners to meet human rights standards;2) require adherence only to specific principles like the abolition of child

and forced labor or the right to a safe work environment; or3) require suppliers to adhere to the same standards as the company, or

more broadly, human rights standards.

80. Finally, supply chain management systems seem to activate at two phases of thesupplier relationship, the time of tenderand the time of contracting. A third alternative isthe use of an ongoing monitoring mechanism; however, relatively few companies usemonitoring as a means to manage their supply chain. The following cases illustrate howthese systems play out:


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Time of Tender:

81. When selecting a supplier, a French electric company factors whether thesuppliers participate in the GC, stating that 60 percent of its suppliers currently are GCparticipants. A few companies review the human rights performance of suppliers, and

the reputation of the countries where they operate before entering into agreements. Forexample, an Italian extractive company states that suppliers in countries with poorhuman rights records will be expected to provide evidence of their systems forsafeguarding their employees rights.

Time of Contracting:

82. Illustrating the promotion of human rights at the time of contracting, an Americandepartment store conglomerate states that:

"All of the company's vendors are required to sign written affirmations,agreeing to comply with the company's [Vendor/Supplier] Code ofConduct, that are designed to protect workers in this country and abroad.Among other things, the Code requires [the companys] vendors to allowunannounced factory inspections for contractual compliance, as well as forcompliance with laws and regulations dealing with child or forced laborand unsafe working conditions.

Many companies also reserve the right to terminate contracts in the case of human rightsrelated breaches.

Ongoing Monitoring Mechanism:

83. Companies in the sample primarily address monitoring at the time of contracting,where they reserve the right to monitor their supply chain through random and, in somecases, unannounced site visits. Few companies indicate the regularity of such visits. Thefollowing two examples are exceptions and represent a more ongoing monitoring process,inclusive of remediation procedures:

84. Although the combination of monitoring and remediation is rare, one Danishtechnology firm states that it maintains a database of supplier CSR performance. Thecompany utilizes a system of site visits and adjustment of factory conditions to maintaincompliance. Another company, a Chinese merchandise sourcing group, has a SocialCompliance Program that requires every supplier to satisfy a "comprehensive socialcompliance evaluation" based on voluntary initiative SA8000 guidelines. Results areshared with clients and, where needed, suppliers are put on a "comprehensive correctiveaction plan" with continued monitoring.

85. Another tool is the use of third party auditors. One company from the samplepartners with NGOs, while another partners with an industry association to conduct


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routine random audits of their suppliers. Companies also participate in certain collectiveinitiatives, such as the Fair Labor Association, which requires ongoing monitoring andauditing, including surprise visits by third parties.

External Engagement

Community Consultation, Including Impact Assessments

86. Around a quarter of the sample makes some commitment to consult with affectedcommunities. By region, European and North American companies commit toconsultation most frequently, both at around 30 percent. Only 18 percent of LatinAmerican and 10 percent of Asia & Pacific companies make such commitments. NoAfrican companies mention community consultation.

87. Most companies that commit to community consultation do so by means ofdialogue with stakeholders; only few go beyond dialogue and include some type of

human rights impact assessments as part of the community consultation process.Companies in the Financial Services and Extractive sectors stand out because theyconduct or require impact assessments more frequently than those in other sectors.

88. In a typical illustration of the commitment to consult with affected communities,one German based construction company states:

"We integrate the local community into our daily work as much aspossible... including supporting the local economy ... or talking withcommunities about how to design construction projects such that the sitesimportant to their cultural heritage are best preserved."

Another company, an American extractive, formalizes the community consultationpractice through its use of Community Advisory Councils, which ensure ongoingcommunity input.

89. Although impact assessments are relatively rare, one American automobilemanufacturer commits to conducting an impact assessment to support joint decision-making with the community:

The Community Impact Assessment and Engagement model uses datagathering and analysis to support joint decision-making by the communityand the Company, thereby helping put community relationships on a moreequal footing with more measurable business imperatives."

90. Eleven Financial Services companies in our sample have signed on to the EquatorPrinciples, which gauge the social and environmental impacts of projects.10 Otherfinancial companies curb impacts by withholding investment in specific industries, such

10 See Equator Principles, available athttp://www.equator-principles.com/


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as defense, and genetically modified organism-related companies. One Norwegianfinancial firm recognizes its power as an investor to influence company actions:

"The Company is in continual dialogue with companies suspected ofacting contrary to the Global Compact or the OECD Guidelines ... [The

Company] uses its influence as an investor to attempt to guide companiesin a positive direction, often in cooperation with other investors. In certaincases, shareholder rights are used actively in order to influencecompanies.

91. Finally, Extractive sector companies routinely make broad commitments toconsultations, addressing the culture, health, and environmental concerns of surroundingcommunities. Two policies provide for post-closure plans. For example, one Americanextractive company commits to:

! work continuously to understand the culture of the host country and

especially indigenous peoples;! undertake social, cultural, and health studies;

! consult with local populations about important operational issuesthat will impact their communities;

! work with the host countrys government, the local people, andresponsible NGOs to create and periodically update socialintegration and/or sustainable development plans for all operationalsites; [and]

! address the issue of economic and social viability of each operatingarea after cessation of operations.

A South African extractive specifically states that it aims to ensure prompt delivery ofany benefits or protections agreed to with communities.

Philanthropic Programs

92. Most companies in our sample engage in some form of philanthropic activity,including cash giving, company managed community programs, partnership programs,in-kind support to charitable organizations, and encouragement and/or incentives foremployees to engage in community work.

93. Companies in the sample overwhelmingly focus their philanthropic activity on

education and health. Education-related philanthropy ranges from support for theeducation of underprivileged populations to more specific issues like financial literacy.Health-related philanthropy focuses on providing food and clean water in addition tohealth-related education. A number of companies also have specific projects addressingHIV/AIDS in their countries of operation.


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94. Other companies relate their philanthropic activity to their business expertise. AGerman media corporation states that it is important to us that our commitment besustainable and closely identifiable with our business expertise and core competencies.

95. Additionally, some companies partner with NGOs and governmental

organizations. A large Spanish utility company works with the ILO in youth employmentprograms throughout Latin America and commits to the following:

"in the case of particularly disadvantaged environments or communities[we] will endeavour to provide for urgent social needs that cannot beadequately met by other institutions."

D. Anticorruption

96. Bribery and corruption are often considered part of the human rights agenda sincethey are such significant impediments to the realization of rights, and many companies

have adopted anti-bribery policies almost 60 percent of the companies in our sample.Accordingly, we included these policies in our study.

97. North American companies report their anticorruption policies most frequently, ata rate of 71 percent, with European companies slightly behind at 62 percent. Almost halfof the companies from Asia & the Pacific have anticorruption policies, while LatinAmerican companies report significantly lower rates at 21 percent. Four of the fiveAfrican companies have anticorruption policies. There are slight sectoral differences. Atthe high end, Extractive, Heavy Manufacturing, Pharmaceutical & Chemical, and Retail& Consumer Products firms state their policies on corruption at rates of 68-77 percent.Not far behind, Food & Beverage companies state their policy on corruption at a rate of58 percent; the remaining sectors are IT & Telecommunications and Financial Services,which both address anticorruption 50 percent of the time, and Infrastructure & Utilitycompanies, which address anticorruption 43 percent of the time.

98. Policies mainly prohibit the acceptance of excessive or lavish gifts, money, orspecial favors from business partners. A few policies prohibit company contributions topolitical parties or candidates. Others prohibit unethical business practices in general.

99. Several companies note that social amenities, reasonable entertainment, and othercourtesies may be extended to customers, suppliers, or employees, reasoning that suchnominal exchanges are beneficial to business. A few companies also reserve space forculturally appropriate gifts, without defining what this would include.

E. Sources

100. Finally, we sought to determine what instruments or sources inform companyhuman rights commitments. Figure 6 summarizes the most frequently cited.


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The Global Compact

101. Sixty-seven percent of companies in the sample participate in the Global Compact(GC), a voluntary initiative based on ten principles covering human rights, labor,environment, and anticorruption.11 Of those companies, all regions are represented, with4 African companies, 49 Asia & Pacific, 119 European, 24 Latin American, and 20 NorthAmerican companies. North American GC participants are concentrated in two sectors, 6in the IT, Electronics and Telecommunications sector and 6 in the Extractive sector.

Other Voluntary Initiatives

102. A range of other voluntary initiatives are cited by companies: SA8000,Transparency International, the Ethical Trading Initiative, the Business SocialCompliance Initiative12, the Sullivan Principles, Fair Labor Association (FLA), theExtractive Industries Transparency Initiative (EITI), the Electronics Industry Code ofConduct (EICC), the International Council on Mining and Metals (ICMM), and theKimberley Process.13

103. While there was generally no uniformity of citation or membership withinindividual sectors, companies in the Extractive and Financial Services sectors do standout for their adherence to industry-specific initiatives.

11 The GCs CoP database was a main data source, which accounts for the high reference to the GC. TheGC has nearly 3000 corporate participants and other stakeholders.

12See Business Social Compliance Initiative website, available athttp://www.bsci-eu.org

13 See infra Part II, Voluntary Collective Initiatives of this report.


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104. Of the Extractive companies, 50 percent refer to the Voluntary Principles onSecurity and Human Rights (VPs), which aim to reconcile the need for security with theprotection of human rights. 10 of the 12 North American extractive companies cite theVPs. Slightly fewer European companies, 11 of 17, reference them. Notably, not allcompanies that reference the Voluntary Principles are active participants in the

initiative.

14

In addition to the VPs, 4 extractive companies refer to their membership inthe ICMM, 6 to the EITI and 4 to the Sullivan Principles.

105. In the Financial Services sector, 11 of the 38 companies in our sample cite theEquator Principles.15 Additionally, a significant number of companies commit to theUNEP/GC Principles for Responsible Investment.16

UDHR

106. At a rate of almost 50 percent, European companies reference the UDHR mostfrequently. North American companies reference it at a rate of 36 percent. In contrast,

only 20 percent from the Asia & Pacific region and 11 percent of Latin Americancompanies refer to the Declaration. Two of the five African companies also reference it.Companies typically respect, support, or recognize the UDHR.

107. Extractive, IT, and Financial Services companies cite the UDHR more frequentlythan companies in other sectors27 of 44 in the Extractive sector, 19 of 40 in IT, and 16of 38 in Financial Services. One French insurance firm states that:

Although governments have the primary responsibility to promote,ensure the respect of and protect human rights, the Group, as aninternational enterprise, recognises its responsibility to promote andguarantee human rights, as set forth in the United Nations UniversalDeclaration of Human Rights.

ILO

108. Forty percent of European companies reference the ILO. North America comessecond, referencing the ILO at a rate of 25 percent. In contrast, only 7 percent ofcompanies from Latin America, and 6 percent from Asia and the Pacific mention ILOstandards. Three of the 5 African companies in the sample also reference the ILO.

109. Sectorally, companies in the Extractive, IT, and Retail & Consumer Productssectors cite the ILO most frequently. Company commitments are generally framed as

14 See Company Participants, Voluntary Principles On Security & Human Rights, available athttp://www.voluntaryprinciples.org/participants/companies.php

15Equator Principles, available athttp://www.equator-principles.com/

16 The Principles for Responsible Investment, developed by the Global Compact & the UNEP FinanceInitiative, were launched in April 2006, available athttp://www.unpri.org/principles/


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support, recognition, and respect for ILO standards. Where companies commit tocomply with ILO standards, they most often make a specific commitment to theFundamental Rights at Work Convention or other well-known conventions, like theConvention Concerning the Minimum Age for Admission to Employment or Hours ofWork conventions.

110. Illustrating an unusually high level of commitment, a German based retailerassur[es] it will meet ILO standards:

"The Company voluntarily commits itself to assuring, in all itssubsidiaries, the terms of employment and working conditionsrecommended by the ILO".

OECD Guidelines

111. Almost all of the companies citing the OECD Guidelines are European (29 of 34).

Companies generally referred to the Guidelines as a whole and made no specificcommitments to individual principles. Demonstrating a typical level of commitment, oneEuropean pharmaceutical company states that it operates in the spirit of the Guidelines,while another company commits only to what it perceives as relevant sections, whilefailing to elaborate on what those are.

ICCPR/ICESCR and Other UN Documents

112. Only four companies, all European, refer specifically to the ICCPR and ICESCR(where they were mentioned, they were mentioned together). Three other companies citethe Convention on the Rights of the Child, another company refers to the Convention onthe Elimination of Discrimination Against Women, and one company cites the RioDeclaration on Environment and Development.

Summary Part I

113. Even though labor rights enjoy the widest recognition by companies, it isnevertheless apparent that some regions and sectors lag in recognizing even the mostfundamental labor rights. For example, the prohibitions against forced and child laborare considered to be part of the four fundamental principles and rights at work17;however, the level of recognition of these prohibitions reaches as low as 25 percent byregion and as low as 40 percent by sector. Moreover, apart from the almost 90 percentrecognition of the right to nondiscrimination and the 75 percent recognition of the right toa safe work environment, the remaining labor rights receive recognition from two thirdsor fewer of the companies. This can scarcely be deemed adequate for rights so evidentlyconnected to employees, one of corporations primary stakeholders.

17 See ILO Declaration on Fundamental Principles and Rights at Work, ILO, available athttp://www.ilo.org/public/english/standards/relm/ilc/ilc86/com-dtxt.htm


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114. Emerging markets, inclusive of Latin America and Asia and the Pacific, recognizelabor rights less than North America and Europe, with gaps between emerging anddeveloped markets reaching over 30 percent for some rights, including the right to a safework environment, nondiscrimination, and the prohibitions against forced and childlabor. Although the Asia & Pacific region trails North America and Europe, it follows

more closely than Latin America in most instances. Recognition of the right to aminimum wage and rights pertaining to work/life balance is low irrespective of region.

115. For non-labor rights, the low levels of recognition are striking. Even for the mostrecognized rights, such as security related rights, the right to privacy, and the right todevelopment, the levels of recognition do not go higher than 19 percent. Admittedly, thelittle attention given to some rights seems logical. For example, the right to a fair trial isnot a right that companies will routinely, if ever, have an impact on. Thus, it seemsappropriate that the levels of recognition are low for this right. However, this does nothold true for many other non-labor rights where a companys potential impact is moreevident.

116. In addition, company reporting on human rights commitments varies widely,ranging from reports solely on philanthropic activity to more detailed reports that use ahuman rights checklist like that provided by the GRI. The inclusion of human rightsstandards in supply chain management also varies in approach and substance.Furthermore, company engagement in community consultations is rare, and the use ofhuman rights impact assessments even rarer.

117. When reviewing the human rights instruments referenced by companies, one cansee the influence of certain sources on corporate recognition of rights. For example,European companies reference the UDHR and ILO as much as 35 percent more thanother regions. Not surprisingly, European companies also recognize human rights athigher rates across the board. North America follows closely in its recognition of theUDHR and is on par with many of the patterns of rights recognition of EuropeanCompanies.

118. Finally, in addition to connections between sources referenced and rates of rightsrecognition, one can also see some connections between the rights recognized bycollective initiatives and socially responsible indices and those recognized by companies.Accordingly, Part II of this report reviews several collective initiatives, and Part IIIexamines socially responsible investment indices.


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II. COLLECTIVE INITIATIVES

Introduction

119. This section of the report considers voluntary collective initiatives. Companies

that sign up to them are expected to follow their human rights parameters and in somecases may be removed from membership if they do not. Companies either devised orhelped devise the criteria for membership. Thus, the initiatives reflect the behavior thatcompanies and other stakeholders believe are necessary for a corporation to operateethically and according to international human rights standards.

120. The sample includes eight collective initiatives. They were selected because theyhave been widely adopted within their respective industries. We drew solely uponpublicly available information when analyzing the collective initiatives. TheInternational Council of Toy Industries (ICTI), Worldwide Responsible ApparelProduction (WRAP), Electronic Industry Code of Conduct (EICC), the Equator

Principles, and the International Council on Mining and Metals (ICMM) are industryinitiatives, meaning that they were initiated by industry members for their specificsectors. Social Accountability 8000 (SA8000), the Ethical Trade Initiative (ETI), andthe Fair Labor Association (FLA) are multi-stakeholder initiatives. Each involvesbusiness and non-governmental organizations; SA8000 and the ETI include labor; theETI and FLA were initiated with assistance by government; and the ETI continues tohave governmental involvement.

121. The initiatives fall broadly into two categories. The first, which includes WRAP,FLA, ETI, EICC, ICTI, and SA8000, focus on manufacturing. All of the other initiativesin the sample address large-scale projects, such as infrastructure and natural resourceextraction. In this category, ICMM addresses mining practices, while the EquatorPrinciples apply to project finance lenders.18

122. In the realm of labor rights, the results of the collective initiative survey generallyparallel the company survey, prohibiting child and forced labor, upholding the principleof non-discrimination, promising a safe and healthy workplace, and committing torespect freedom of association and collective bargaining. Additionally, the collectiveinitiatives show significant support for the right to a minimum wage and the right to restand leisure. The collective initiatives show greater recognition than the companies in theareas of civil, political, social, economic, and cultural rights.19 The two initiatives thatfocus on large-scale projects address indigenous rights and communication with thesurrounding community in more depth.

18 For more information regarding the practices of the collective initiatives, please see Meaningful Change:Raising the Bar in Supply Chain Workplace Standards, prepared by Roseann Casey for John Ruggie, UNSpecial Representative of the Secretary General, available athttp://www.reports-and-materials.org/Ruggie-briefing-paper-for-Thailand-consultation-June-2006.pdf.

19 The rights in this report are ordered according to the prevalence with which the collective initiativesrecognized them. The order in no way reflects upon the intrinsic importance of the rights.


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123. The following is a brief description of the initiatives:

! EICC (2004) electronics industry EICC is an industry initiative, composed ofbrand name electronics companies. Members commit to following a voluntarycode. EICC states that participants should apply the code and related

management system to its next tier suppliers. It does not require that the entiresupply chain meet its standards, although it is considering changing this rule.20

! The Equator Principles (2003, revised 2006) financial institutions TheEquator Principles are an industry initiative, formed by private financialinstitutions engaged in project finance. Members commit not to lend to borrowerswho do not comply with the Principles environmental and social requirements.The Equator Principles incorporate the International Finance Corporations (IFC)Performance Standards on Social and Environmental Sustainability.21

! ETI (1998) Manufacturing Industries - ETI is composed of companies, NGOs,

and trade organizations, and it is partially funded by the UK government. Itworks to identify and promote good practices in code implementation,monitoring, and verification. Member companies promise to implement its codeof conduct throughout the supply chain and to terminate relations if violationspersist. ETI does not certify factories or companies.22

! FLA (1999) Garment and Apparel Industries - The FLA incorporates multiplestakeholders, including business, NGOs, and universities. FLA certifies externalauditors, who in turn certify brands. FLA companies commit to incorporate FLAstandards throughout the supply chain. FLA emphasizes the need to work withthe supply chain to bring practices into compliance rather than simply ending the

20 This report references information that the initiatives have made available and free to the public. EICCdocuments referenced through this report: Electronic Industry Code of Conduct, Version 2.0, Oct. 2005.

21 Equator documents referenced throughout this report: The Equator Principles (July 2006);InternationalFinance Corporations (IFC) Performance Standards on Social and Environmental Sustainability. TheEquator Principles incorporate the IFC Performance Standards. The Equator Principles require a lenderbank to carry out an environmental and social assessment of the client project, followed by application ofsocial and environmental standards. The assessments are only for projects that have potential significantadverse social or environmental impacts that are diverse, irreversible or unprecedented or potentiallimited adverse social and environmental impacts that are few in number, largely reversible and readily

addressed through mitigation measures. The application ogf social and environmental standards is basedupon the IFC Performance Standards. The Standards only apply to non-OECD or non-high income OECDcountries. Projects must comply with the IFC Performance Standards unless the assessment shows ajustified deviation. This report discusses the Equator Principles in the cases that all its sections areapplied, which depends on whether the company operates in an OECD country or is likely to havesignificant adverse impacts.

22 ETI documents referenced throughout this report: ETI Principles; Purpose, Principles, Programme andMembership Information; ETI Corporate Annual Reporting Guidelines 2004.


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supplier relationship.23

! ICMM (2003) Mining Industry ICMM is an industry initiative, formed by 15major mining companies accounting for approximately 50 percent of theindustrys market capitalization. Members agree to follow a common set of

principles. The principles focus on issues such as involuntary resettlement,community development, and communication with stakeholders. They requiremembers to encourage the supply chain to adhere to the same standards.24

! ICTI (now the ICTI Care Process) (1995) Toy industry - ICTI was created bytoy corporations, and its members are national trade associations and theirmember corporations. ICTI members pledge to abide by the Principles ofBusiness Conduct and require their suppliers to do so as well. ICTIs CareProcess certifies external auditors, who in turn certify factories.25

! SA8000 (Accreditation System launched 1997, Corporate Involvement Program

1999) - Multiple Industries - SA8000 incorporates multiple stakeholders,including NGOs, unions, and business. It provides certification by independentauditors and helps companies implement compliant management systems.26

! WRAP (2000) Garment and Apparel Industries - WRAP is an industry initiativecomposed of trade associations and factories. WRAP certifies external auditors,who in turn certify factories. WRAP producers promise to incorporate WRAPstandards throughout the supply chain.27

A. Labor Rights

124. In general, the labor rights that are most often recognized in the collectiveinitiatives mirror those in the company surveys. The most-cited labor rights, referred toby all eight initiatives, include: the right to non-discrimination in the workplace, theabolition of slavery and forced labor, and the right to a safe work environment. Seveninitiatives recognize the duty to abolish child labor. The fairly frequent recognition of theright to freedom of association and collective bargaining (7 initiatives) is similar to the 50

23 FLA documents referenced throughout this report: Workplace Code of Conduct; Monitoring Guidanceand Complying Benchmarks.

24 ICMM documents referenced throughout the report: ICMM Sustainable Development Principles; ICMM

Sustainable Development Framework; Position Statement on Mineral Resources and EconomicDevelopment; Extractive Industries Transparency Initiative;

25 ICTI documents referenced throughout the report: Code of Business Practices, Appendix IIa: GuidanceDocument.

26 SA8000 documents referenced throughout the report: SA8000 Standards (2001).

27 WRAP Apparel Certification Program Principles; WRAP Production Facility Handbook.


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percent recognition rate in the company survey.

125. The initiatives reflect some variation from the patterns found in the companysurvey. The collective initiatives are more likely to recognize a right to work, in a formgoing above and beyond vocational training. Another difference emerges regarding the

min